Cumulus Investments Limited found itself at the centre of controversy as the directors of the fund had a conflict of interest in one of its funds.
Cumulus Investments Limited
The Cardiff company was founded in 2009 and offered self-invested personal pensions (Sipps) to its clients.
The company was dissolved in June 2017 after a number of complaints surrounding mis-selling. 12 of the complaints were upheld by the Financial Ombudsman Service (FOS).
Cumulus European Property Fund Limited
The Sipp that raised the complaints was Cumulus European Property Fund Limited, an overseas property fund.
The Ombudsman found that the firm had clear conflicts of interests as the Directors of Cumulus Investment Management were also Directors of the new fund.
The Ombudsman discovered that 100 ordinary shares of the new fund would be owned evenly between two individuals which turned out to be the Directors of Cumulus Investment Management and therefore both stood to gain by increasing the value of the fund.
Clients were introduced to the fund through unregulated introducers and the firm then dealt on an ‘execution’ basis with very high risk investments for unsophisticated investors.
An estimated £1,125,8949 was invested in the Cumulus European Property Fund Ltd.
As they financially benefited from client investments in the property fund, the Directors could not have offered impartial advice in the best interests of the client. This constitutes financial mis-selling.
Overseas property investments
The high risk Eastern European property scheme was not a safe investment for the firm’s clients. As the scheme was unregulated, any loss could not have resulted in compensation.
You can learn more about overseas property funds and the risks they hold here.
Our experts can offer impartial advice on how you can get your money back from a mis-sold Sipp.